FEDERAL COURT OF AUSTRALIA Williams v Commonwealth of Australia [2000] FCA 800 PATRICIA LORRAINE WILLIAMS v THE COMMONWEALTH OF AUSTRALIA & ANOR N 7398 OF 2000 LINDGREN J 6 JUNE 2000 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7398 OF 2000 BETWEEN: PATRICIA LORRAINE WILLIAMS APPLICANT AND: THE COMMONWEALTH OF AUSTRALIA FIRST RESPONDENT OFFICIAL TRUSTEE IN BANKRUPTCY SECOND RESPONDENT JUDGE: LINDGREN J DATE OF ORDER: 6 JUNE 2000 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicant pay the respondents' costs. 3. The time for compliance with bankruptcy notice NN 622 of 2000 be extended until 5.00 pm on 13 June 2000. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7398 OF 2000 BETWEEN: PATRICIA LORRAINE WILLIAMS APPLICANT AND: THE COMMONWEALTH OF AUSTRALIA FIRST RESPONDENT OFFICIAL TRUSTEE IN BANKRUPTCY SECOND RESPONDENT JUDGE: LINDGREN J DATE: 6 JUNE 2000 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Ms Williams applies for an order setting aside bankruptcy notice NN 622 of 2000. The bankruptcy notice was served on 26 April 2000 and required payment of $22,500 within twenty one days after service. The debt arose out of an order made by Branson J in proceeding NG 8014 of 1998. Her Honour ordered on 12 March 1999 that the proceeding be dismissed and that the applicants in that proceeding, Ms Williams and her then (and now late) partner Ernest Arthur Wilson, pay the costs of the respondents to that proceeding, who are also the respondents to this proceeding. In addition to a copy of her Honour's orders, there was annexed to the bankruptcy notice a certificate of taxation to the effect that the respondents' costs as between party and party were deemed, pursuant to O 62 r 46(3)(c), to be $22,500. 2 In her application Ms Williams also sought by way of interlocutory relief an order extending the time for compliance with the bankruptcy notice up to and including the twenty first day after the decision of an application to the High Court to which I will shortly refer. Currently the time for compliance with the bankruptcy notice has been extended, by an order which I made on 30 May, to today. 3 The present application is but one in a long series of proceedings launched by Ms Williams or by her and Mr Wilson who died on 15 January 2000 and probate of whose will was granted to Ms Williams on 28 February 2000. I will give a brief summary. 4 Ms Williams and Mr Wilson leased a hotel at Blackheath from Welona Pty Limited ("Welona") for five years commencing on 29 January 1980 and terminating on 29 January 1985. There was a dispute between lessor and lessees arising out of a question of disrepair. Apparently the argument of the lessees was that the lessor was in breach of an obligation to repair and the argument of the lessor was that the lessees were in breach of an obligation to maintain in repair. In 1986 sequestration orders were made against the estates of Mr Wilson and Ms Williams and Welona lodged a proof of debt for $151,756.57 for the cost of repairs it had carried out. 5 Mr Wilson and Ms Williams applied to the Court in respect of a decision of their trustee in bankruptcy, the Official Trustee in Bankruptcy, to admit the proof of debt to the extent of $96,594.39. These were proceedings NG 114 and NG 426 of 1986. The critical question was the condition of the premises at the commencement of the lease. On 10 December 1992, after a three day hearing, Sweeney J allowed the proof of debt in a total sum of $140,534.45. 6 On 8 July 1994, a Full Court (Sheppard, French and Einfeld JJ) dismissed an appeal from Sweeney J's judgment and dismissed a motion seeking a new trial on the basis that fresh evidence had become available: see (1994) 122 ALR 585. 7 On 17 February 1995, special leave to appeal to the High Court was refused. 8 Mr Wilson and Ms Williams have commenced other proceedings which sought, in one way or another, to re-agitate the question of the condition of the hotel as at the commencement of the lease. The most important one for present purposes is proceeding NG 8014 of 1998 previously mentioned. This was a proceeding by Mr Wilson and Ms Williams against the present respondents under sections 178 and 179 of the Bankruptcy Act 1966 (Cth). On 12 March 1999, Branson J summarily dismissed the proceeding: [1999] FCA 219. 9 In proceeding N 261 of 1999 Mr Wilson and Ms Williams sought leave to appeal from the summary dismissal and that application was refused by a Full Court (Burchett, Weinberg and Hely JJ) on 21 September 1999: [1999] FCA 1308. 10 Mr Wilson and Ms Williams were represented at and down to the delivery of that judgment on 21 September 1999. 11 In proceedings NG 7052 and NG 7053 of 1996, Mr Wilson and Ms Williams sought by motions an order setting aside the judgment of Sweeney J. Those motions were heard by Beaumont J on 14 October 1999 and on the same day his Honour dismissed them with costs as an abuse of the process of the Court. In proceedings N 1256 and N 1257 of 1999, Mr Wilson and Ms Williams sought leave to appeal from that judgment. On 20 March 2000 a Full Court (Finn, Marshall and Goldberg JJ) dismissed the appeal and ordered Ms Williams (Mr Wilson had died by then) to pay the respondents' costs: [2000] FCA 304. 12 There are apparently other proceedings on foot in relation to various aspects of Ms Williams' bankruptcy, some of which are in Emmett J's docket (see, for example, [1999] FCA 1760). 13 On 4 April 2000, Ms Williams filed in the Sydney Registry of the High Court an application S 49 of 2000 for special leave to appeal from the judgment of the Full Court (Finn, Marshall and Goldberg JJ) delivered on 20 March 2000. 14 Ms Williams commenced in this Court proceeding N 311 of 2000 seeking an order restraining the Official Trustee in Bankruptcy from dealing with certain assets pending the hearing and determination of her application to the High Court for special leave to appeal from that Full Court judgment of 20 March 2000. On 7 April 2000, Moore J dismissed that proceeding with costs: [2000] FCA 529. 15 On 4 April 2000 Ms Williams had also filed in the Sydney Registry of the High Court what was called "Application for Special Leave to Appeal" (S 76 of 2000) by which she purported to apply for special leave to appeal from the judgment of the Full Court (Burchett, Weinberg and Hely JJ) delivered on 21 September 1999. That application was filed well out of time, the expiry date for the filing of an application for leave to appeal having been 19 October 1999: see High Court Rules O 69A r 3(1). Ms Williams' application included a request for an order that compliance with subr 3(1) in O 69A of the High Court Rules "be dispensed with". 16 I am called upon to consider the prospects of success of the applications before the High Court, their effect if successful, and the consequences for Ms Williams of my not granting her present application. But the most that Ms Williams could expect to get today would be an order further extending the time for complying with the bankruptcy notice until after the hearing and determination of the applications in the High Court. 17 It will be noted that the application before the High Court that relates indirectly to Branson J's order for costs which founds the bankruptcy notice, is but an application for an extension of time within which to seek special leave to appeal. Such an application for an extension of time will not succeed where the High Court forms the view that the granting of special leave itself would be futile because an appeal itself would not have sufficient prospects of success. 18 I have read the grounds of appeal set out in the draft notice of appeal and I think it very unlikely that the High Court would grant special leave to appeal and therefore I think it very unlikely that the High Court will grant the extension of time. The issues raised by the grounds of appeal raise factual issues which were before Branson J and the Full Court. The proposed appeal would not raise any question of general principle. There is not a reasonable prospect of Ms Williams convincing the High Court that the Full Court erred. 19 In relation to Ms Williams' other application before the High Court, that is the application for special leave to appeal itself, I hold the same views. 20 If I dismiss the present application to set aside the bankruptcy notice, I presume that the notice will not be complied with and Ms Williams will commit an act of bankruptcy. I presume that the present respondents will then file a creditor's petition and in due time that petition will come before this Court for hearing and determination. It may be that that time will be so close to the likely date of hearing of the applications in the High Court that this Court would see fit to adjourn the hearing of the petition until after they have been heard and determined. (There is evidence that Ms Williams' applications will probably be heard in the October or November sittings of the High Court and that it is unlikely that they will be heard in the September sittings.) 21 For this and other reasons, the Court will be better placed to assess Ms Williams' position on the hearing of a creditor's petition. The evidence may show that she is hopelessly insolvent or, on the other hand, that she is clearly solvent and that the respondents are wrongly using the bankruptcy procedure as a substitute for the proper method of debt recovery. 22 Ms Williams submits that if a sequestration order is made, the result will be that she will lose the opportunity to pursue her two applications before the High Court. It is not clear that this will be so, at least in relation to the application for the extension of time in which to seek special leave to appeal from the judgment of the Full Court dated 21 September 1999 (Burchett, Weinberg and Hely JJ). The reason is that the proceeding before Branson J was brought under ss 178 and 179 of the Bankruptcy Act 1966 and the right of application under those sections is arguably a personal right of the former bankrupt, that is, Ms Williams. If so, it is difficult to think that that right of application would be lost if a second sequestration order were to be made. (I should note in passing that there is evidence before the Court that if the present respondents do proceed to obtain a sequestration order, it is their intention to seek the appointment of a private trustee in bankruptcy rather than the Official Trustee in Bankruptcy, because of the conflict of interest which might otherwise arise.) I do not, however, find it necessary to form a final view on the question whether Ms Williams would cease to be able to pursue her High Court applications upon her becoming a bankrupt for a second time. 23 For the reasons given earlier, the Court orders that: 1. The application be dismissed. 2. The applicant pay the respondents' costs. 3. The time for compliance with bankruptcy notice NN 622 of 2000 be extended until 5.00 pm on 13 June 2000. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. Associate: Dated: 14 June 2000 Counsel for the Applicant: The Applicant appeared in person Solicitor for the Respondents: Mr Michael Murray of The Australian Government Solicitor's Office Date of Hearing: 6 June 2000 Date of Judgment: 6 June 2000